CHAPTER 3 : STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

Learning Outcomes

• List and describe the four basic component of supply chain management.
• Explain customer relationship management systems and how they can help organizations understand their customers.
• Summarize the importance of enterprise resource planning systems.
• Identify how an organization can use business process reengineering to improve its business.

Strategic Initiatives

Organization can undertake high-profile strategic initiatives including: 

• Supply chain management (SCM)
• Customer relationship management (CRM)
• Business process reengineering (BPR)
• Enterprise resource planning (ERP)

1) Supply Chain Management (SCM)
Involves management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.

Four basic components of supply chain management

1. Supply Chain Strategy- Strategy for managing all resources to meet customer demand. 
2. Supply Chain Partner- partner throughout the supply chain that deliver finished product, raw material and services.
3. Supply Chain Operation- Schedule for production activities.
4. Supply Chain Logistics- Product delivery process.

Wal-Mart and Procter & Gamble (P&G) SCM

Effectiveness and efficient SCM systems can enable an organization to:

• Decrease the power of its buyer.
• Increase its own supplier power.
• Increase switching costs to reduce the threat of substitute products or services.
• Create entry barriers thereby reducing the threat of new entrants.
• Increase efficiencies while seeking a competitive advantage through cost leadership.

Effectiveness and efficient SCM systems effect on Porter's Five Forces

Customer Relationship Management (CRM)

• Involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability
• Many organization such as Charles Schwab and Kaiser Permanents, have obtained great success through the implementation of CRM systems.
• CRM is not just technology but a strategy, process and business goal that an organization must embrace on a enterprisewide level.

CRM can enable an organization to:
- Identify types of customers
- Design individual customer marketing campaigns
- Threat each customer as an individual
- Understand customer buying behaviours

CRM OVERVIEW

Business Process
A standardized set of activities that accomplish a specific task, such as processing a customer's order.

Business process reengineering (BRP)
the analysis and redesign of workflow within and between enterprises
-The purpose of BPR is to make all business processes best-in-class.

Reengineering the Corporation
Book written by Micheal Hammer and James Champy that recommends seven principles for BPR.

Finding Opportunity using BPR

- Can improve the way it travels the road by moving from foot to horse and then horse to car.
- BRP looks at taking a different path, such as an airplane which ignore the road completely.

- Types of change an organization can achieve, along with the magnitude of change and the potential business benefit.


Enterprise Resource Planning
- Integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprisewide information on all business operation.

- Keyword in ERP is "enterprise"

ENTERPRISE RESOURCE PLANNING

- ERP systems collect data from across an organization and correlates the data generating an enterprisewide view.

OPENING CASE STUDY QUESTIONS:

1. Evalute how Apple can gain business intelligence through the implementation of a customer relationship management system.
2. Create an argument against the following statement: "Apple should not invest any resources to build a supply chain management system.
3. Why would a company like Apple invest in BPR?